“We are absolutely prepared to go vertical without a tenant,” John Herr, Lincoln Property's local executive, tells GlobeSt.com. Herr estimates it will take several months to get final approvals from the city. He expects to break ground next spring; the Mining Exchange building will be preserved by becoming the entrance to the new building.

Lincoln Property Co. has been invested in the West Coast for 35 years. In Downtown, the company owns 601 California St. and the Waterfront Plaza Office Park formerly known as Francisco Bay. In the Silicon Valley, it owns one million sf in Sunnyvale and North San Jose. The company also is the third-party manager for one million sf of industrial in the North Bay.

Preston Butcher, who got things going on the West Coast for Lincoln, left eight years ago and started Legacy Partners. Herr came on to ramp things up again. “We've wanted to develop in San Francisco for a long time,” he says. “We're confident that we will be able to achieve the pro forma lease rates.”

Herr didn't disclose the pro forma lease rate for 350 Bush, but he did say the total development cost to complete both buildings is expected to be approximately $300 million or $750 per sf. Vacancy rates are on the decline and lease rates are currently on the rise in Downtown San Francisco, with the class A average being in the $50 per sf range, the newest commanding between $60 and $80 per sf and the high end being $100 per sf.

While there are no other office development sites in the North Financial District, there are plenty of development sites elsewhere in the city. There are approximately 23 office projects totaling 11 million sf in the city's development pipeline, according to a compilation by the local office of Jones Lang LaSalle. The total includes 2.4 million sf under construction; 890,000 sf that are entitled but not yet under construction; 2.67 million sf for which entitlements are being sought; and four projects totaling four million sf that are in earlier stages of development.

Beyond the 3.3 million sf under construction or entitled, everything is in question, however, thanks to Proposition M. Established in 1986 to control economic growth and development, Prop M caps the amount of high-rise office development that can be approved for development at 875,000 sf per development year, which runs October through September. Given that, it would take eight years for all of the un-entitled projects in the development pipeline to be approved for development, let alone built.

The 2.4 million sf under construction is divided among six projects. Two of those projects–Foundry Square I by Wilson Meany (400 Howard St.; 335,000 sf; 10 stories) and the new Federal Building (1000 Mission; 600,000 sf; 18 stories)–have no availability. A third project, Shorenstein's 409-411 Illinois St. (five stories; 450,000 sf), is 50% preleased.

No preleasing has been announced for the other three projects that are under construction. The projects are 555 Mission St. (559,000 sf; 33 stories), which is being developed by Tishman Speyer and Morgan Stanley; 500 Terry Francois Blvd. (258,538 sf; six stories), being developed by Lowe Enterprises; and the 185 Berry St. addition (175,000 sf; two new floors), which is being developed by Rreef.

All of the projects under construction are scheduled for delivery in 2008 except the federal building, which was recently completed. None of the projects under construction is trying for LEED certification from the US Green Building Council, according to JLL.

The project entitled but not yet under construction include 350 Bush St.; Foundry Square III by Wilson Meany (505 Howard; 220,000 sf; 10 stories); 524 Howard St. by Higgins Development and the Pritzker family (275,000; 23 stories); and 44 Fourth St. by Jamestown Properties (110,000 sf; height TBD).